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  IESA WINWire Jan 14, 2017 - Jan 20, 2017 for Subscription click here  
11th Anniversary

IESA Vision Summit 2017, Bengaluru
Source: Startup Meet; January 14, 2017

Meet the business delegation from Scotland, Philipines and Japan.

India Electronics and Semiconductor Association (IESA) is the premier trade body committed to the development of a vibrant Indian Electronics System Design and Manufacturing (ESDM) ecosystem and evangelizing the dream of establishing “Brand India” that is recognized worldwide as a go-to destination for electronic products. Our vision is to bring the Indian industry, government and academia on a common platform and jointly work towards developing and promoting Made-in-India products for the global markets.

The primary objective of IESA is to act as a catalyst for the growth of the ESDM industry in India.

Odisha steps up efforts to implement Rs 2 lakh cr investments
Source: Business Standard; January 16, 2017

After bagging investment intentions of Rs 2.03 lakh crore at the Make in Odisha conclave held in Bhubaneswar last year, Odisha government has stepped up efforts to implement the same at the earliest.

"In a follow-up to the Make in Odisha event, we are reaching out to those who committed investments at the meet, to urge them to implement their proposals at the earliest and to assure them all support from our side. We have met the investors in New Delhi and Mumbai and will soon hold such meetings with others in Kolkata, Bengaluru and Hyderabad," said an Ipicol (Industrial Promotion & Investment Corporation of Odisha Limited), the nodal agency to usher in fresh investment in the state.

Odisha has set a target to implement fresh investments of at least Rs 1.5 lakh crore in the next three years out of the Rs 2.03 crore investment intentions promised at the Make In Odisha summit.

Out of the total investment proposals received at the meet, metals & minerals sector was the top investment grosser with Rs 97,911 crore. Infrastructure followed next with proposals worth Rs 38,443 crore, power & renewable energy (Rs 29,932 crore) and fertilisers, chemicals & petrochemicals and plastics (Rs 27,023 crore).

Other sectors also bagged sizeable investments -- manufacturing (Rs 2,685 crore), tourism (Rs 2,076 crore), food processing (Rs 2,101 crore), IT & electronics system design and manufacturing or ESDM (Rs 1,500 crore), textiles and handloom (Rs 172 crore).

Govt Planning To Overhaul Rs10,000 Crore Start-Up Fund
Source: Mint; January 16, 2017

The department of industrial policy and promotion (DIPP) is set to overhaul its Rs10,000 crore start-up funding scheme by allowing venture capital (VC) funds to invest half of the corpus in start-ups and the rest of it in firms at a more mature stage to reduce capital risk.

The VC funds that manage the corpus on behalf of the government are currently mandated to invest the money only in start-ups.

The Union cabinet cleared the Fund of Funds for Start-ups under the Small Industries Development Bank of India (Sidbi) in June for contribution to various VC funds registered with the Securities and Exchange Board of India as part of the Start-up India Action Plan unveiled by Prime Minister Narendra Modi in January 2016.

The fund is intended to assist innovative start-ups through their journey to becoming full-fledged business entities. The Rs10,000 crore corpus could potentially be the nucleus for catalysing Rs60,000 crore of equity investments and twice as much debt investments, according to DIPP. “This would provide a stable and predictable source of funding for start-up enterprises and thereby facilitate large scale job creation,” DIPP had said last year.

An amount of Rs500 crore has already been provided as fund corpus in 2015-16 and Rs600 crore has been earmarked for the current fiscal year. The fund is expected to generate employment for 1.8 million people on full deployment.

Startup India: 2016 Not a Good Year as New Startups Decline By 67%
Source: The Indian Express; January 16, 2017

The Startup India campaign aimed at boosting entrepreneurship marks its first year anniversary January 16 but it has not yet rendered the desired results. The year 2015 saw an 87 per cent increase in the number of startups being founded, the number dropped by 67 per cent in 2016. Funding also slumped in 2016 by around 47.7 per cent. At least 800 start-ups founded after 2011 have shut shop, signalling a deteriorating health of the sector, according to data analyst firm Tracxn Technologies.

Startups such as Peppertap, BeStylish, Fashionara and Localbanya form a part of the Deadpool List, a catalogue of dead or dying startups compiled by Traxcn. Until 2015, startups in the country were consistently growing because of the government’s promises on funds, assistance hubs and tax relaxation.

Moreover, the Startup India initiative had received only 1,368 applications by mid-December last year, of which only 502 were recognised as startups by the Department of Industry Policy and Promotion (DIPP). “The decline was ironical,” said Praveen Chakravarty, co-founder of Mumbai Angels, an angel investment group. “Just after the government launched a Startup India initiative on January 2016, investments into startups dropped and therein lies a lesson.”

“To foster a good investment climate, what we need is not a policy for startups but a robust environment for starting a business, ease of capital flows to enter and exit,” said Chakravarty.

Budget May Propose Sops to Push Local Mobile Phone, Parts Production
Source: Deccan Herald; January 17, 2017

Aimed at boosting ‘Made in India’ mobile phones and its components, the upcoming Budget is likely to propose lower duty on domestically-produced handsets and parts including keypad, USB cable, and receiver.

Officials in the Ministry of Electronics and Information Technology suggested to the Ministry of Finance in the pre-Budget meeting that if duty on locally-produced parts reduced, it would not only encourage domestic manufacturers to produce more components, but will also reduce the cost of smartphones made in India.

With 42 mobile phone manufacturers and 15 component manufacturing units having already set up their plants in India, by giving tax sops to parts-makers, the country can attract more such companies, an official in the ministry said.

Earlier, the Indian Cellular Association (ICA), which represents all major handset-makers, had suggested the government to lower the duty on India-made components such as USB cable, keypad, receiver, and manufacturing of metal and plastic sub-components, and to impose more tax on imported goods.

The country has generated Rs 54,000 crore worth of locally-made phones in 2015-16, and it is set to reach close to Rs 1 lakh crore by this fiscal. Noida, Gurugram, Pune, and Hyderabad emerged as major hubs for mobile phone- and component-makers.

Currently, imported mobile phones are levied a 12.5% countervailing duty, while 1% excise duty is levied on domestic manufacturing, making local assembly 11.5% cheaper. The same difference was extended to chargers, batteries and headsets in the last Budget.

Defence Ministry Proposes Foreign Collaboration for Arms Manufacture in?India
Source: Hindustan Times; January 17, 2017

The defence ministry has come out with a proposal for manufacturing top-of-the line fighters, warships and battle systems under the Make in India programme by facilitating collaboration between Indian and foreign arms manufacturers.

The proposed “strategic partners” policy, which is awaiting approval, would invite long-term tie-ups and complete technology transfer, sources in the ministry said.

“India will offer its private sector defence majors for tie-up with global defence manufacturers and allow them to manufacture in India provided full transfer of technology including source codes is agreed to,” a source in the ministry said.

The proposal goes beyond the “screwdriver technology” wherein foreign firms outsource few components to their Indian partners without sharing the technology.

India has an offset clause for defence purchases that require foreign firms to invest a portion of the deal in the country.

The ministry would identify Indian players in the private sector and put them in touch with foreign defence majors for making equipment in India for its military as well as exports.

Once two sides agree to a joint venture, the ministry would sign a long-term agreement with them, assuring dedicated orders and first right of refusal on upgrades.

This would ensure complete technology transfer and long-term commitment of the foreign firm to manufacture in India, sources said.

Worldwide semiconductor revenue grew 1.5 percent in 2016: Gartner
Source: CIO; January 18, 2017

Worldwide semiconductor revenue grew 1.5 percent in 2016: Gartner

Intel retained the top semiconductor vendor position for the 25th consecutive year, according to Gartner.

Worldwide semiconductor revenue totaled USD 339.7 billion in 2016, a 1.5 percent increase from 2015 revenue of USD 334.8 billion, according to preliminary results by Gartner. The top 25 semiconductor vendors' combined revenue increased by 7.9 percent compared with 2015, and accounted for 75.9 percent of the market.

"After a poor start to the year, characterized by inventory burn-off, the second half of 2016 was fueled by inventory replenishment and improved demand and pricing," said Adriana Blanco, senior research analyst at Gartner. "Overall, semiconductor revenue for the second half of the year was much stronger than the first half, reflecting the strengthening memory market and continued inventory replenishment, as well as inventory build for both the iPhone 7 and the holiday season."

Intel remained in the top spot, reaching a quarter of a century as the No. 1 semiconductor vendor, with 15.9 percent market share. Samsung Electronics maintained the No. 2 position for the 15th year with 11.8 percent of the market. Broadcom was the best performer in the top 25, climbing 11 places to reach the fifth position after the Avago Technologies acquisition of Broadcom Corporation.

Cabinet Approves Incentive Scheme, Boost for Electronics Manufacturing
Source: The Economic Times; January 19, 2017

The Cabinet has approved on Wednesday the modified version of a key scheme that incentivizes electronics manufacturing in the country. Approvals under the policy called Modified Special Incentive Package Scheme (M-SIPS) will be accepted till December 2018 or till an incentive commitment of Rs 10,000 crore is reached. The time frame for the incentives has also been fixed as five years (down from ten years) which means that incentives will be available for investments made within five years from the date of approval.

ET had reported on December 21st that the scheme will soon be approved by the Cabinet with amendments that cap the incentive to Rs. 10,000 crore and the timeframe of the scheme till December 2018.

Union minister for law, electronics and information technology, Ravi Shankar Prasad said, “We have today amended MSIPS scheme. Now, proposals under MSIPS will be accepted till December 2018. Incentives of Rs 10,000 crore have been allowed. If investment is more than of $1 billion, then a high-powered committee presided by the Cabinet secretary will approve it.”

According to a statement from the government, the Cabinet chaired by Prime Minister Narendra Modi approved the policy “to further incentivize investments in Electronic Sector and moving towards the goal of ‘Net Zero imports’ in electronics by 2020.” Besides expediting investments into the Electronics System Design and Manufacturing (ESDM) sector in India, the amendments in M-SIPS are expected to create employment opportunities and reduce dependence on imports, it added.

Startup bodies appeal for relaxations in tax policies
Source: Firstpost; January 18, 2017

Prominent startup industry bodies including Indian Angel Network, NASSCOM, Indian Venture Capital Association, TiE and Mumbai Angels have jointly appealed to the government to review taxation policies that adversely impact the startup ecosystem.

"Startups have been facing practical difficulties on the taxation front following the blanket applicability of certain sections. We have made a representation to the

government on January 16 regarding this," Saurabh Srivastava, prominent venture capitalist, and co-founder of Indian Angel Network and told reporters here.

Section 56 of the Income Tax Act presently states that money paid by investors for shares in a private Indian company will be subject to 33 per cent tax. "Normally, valuations in the angel round of funding are based on long term expectations of the startup succeeding. Taxing these early stage investments is detrimental to their performance," he further said.

"There should be a separate carve out for angel groups in Section 56. Also, benefits for venture capital funds should be made broader," he further said.

The industry representatives believe that aggressive tax collection by the IT department will adversely impact India's flagship Start-up Action Plan, 'Make In India' initiative and its Ease of Business ranking. According to the Economic Survey released for 2015-16, the Indian venture capital backed companies topped USD 12 billion (approximately Rs 82,500 crore) across more than 1,220 deals in the past two years. in terms of the incentives that are being given.

Cabinet Apprised Of India-Japan MoU on Co-Operation in Outer Space
Source:; January 18, 2017

The Union Cabinet was today apprised of the Memorandum of Understanding (MoU) signed in November last year between India and Japan for cooperation in the field of outer space. The MoU was signed by Indian Space Research Organisation (ISRO) and the Japanese Aerospace Exploration Agency (JAXA) during Prime Minister Narendra Modi’s visit to Tokyo. The purpose of this MoU is to pursue future cooperative activities in exploration and use of outer space exclusively for peaceful purposes.

The agreement provides scope for pursuing cooperation in various areas of space science technology and applications including earth observation, satellite communication and navigation; exploration and space sciences; research and development in space systems and space technology and space industry promotion. India and Japan pursue space cooperation for more than five decades. With the formation of JAXA in 2003, an “arrangement concerning the considerations of potential future cooperation in the field of outer space” was signed in October 2005 between ISRO/Department of Space (DOS) and JAXA.

Subsequently both agencies have signed cooperative documents addressing lunar exploration, satellite navigation, X-ray astronomy and Asia Pacific Regional Space Agency Forum (APRSAF). During the ISRO-JAXA bilateral meeting held at New Delhi in April 2016, both sides stressed the need for updating he contents of ‘2005 Arrangement’ with enhanced scope of cooperation. Accordingly, both sides have arrived at the draft of new ‘Memorandum of Understanding (MoU)’ between ISRO and JAXA concerning cooperation in the field of outer space? and got it signed on November 11, 2016 at Tokyo.

Govt wants India to be manufacturing hub for electronics: Ravi Shankar Prasad
Source: DNA; January 19, 2017

Highlighting the number of international mobile manufacturing and component manufacturing companies that have entered into the Indian market, Union Communications and IT Minister Ravi Shankar Prasad on Wednesday said the government intends to make India an electronic-manufacturing hub.

"We want to make India an electronic-manufacturing hub. We have as many as 108 crore mobile phones in the country and we had requested Arun Jaitley ji that they should be manufactured in India only. And as it is there is zero duty in India for it due to international obligations. We had also been given duty differential," Prasad said while detailing the key decisions taken in a meeting with Union Finance Minister Arun Jaitley over further incentivising investments in Electronic Sector and moving towards the goal of 'Net Zero imports' in electronics by 2020.

"In the last one-and-a-half years, as many as 42 mobile manufacturing companies have entered the market. And 30 component manufacturing companies have also come. Proposals worth Rs. 26,000 crore have come and the best companies of the world like LG, Bosch Automatic and Samsung among others have also entered the Indian market. Throughout this process, Finance Minister Arun Jaitley and Prime Minister Narendra Modi have been very cooperative," he added.

Specifying the enhancements brought in the M-SIP scheme, Prasad said, "We have modified the M-SIP scheme

CEAMA Hails Govt's Rs 10,000 Cr Electronics Manufacturing Sop
Source: Money Control; January 19, 2017

Consumer electronics goods makers have welcomed the government's approval of Rs 10,000 crore incentive for electronic manufacturing by March 2018, saying the move would discourage import of components and parts required for making handsets. According to CEAMA (Consumer Electronics & Appliances Manufacturer Association), the incentive would help realise the Modi government's Make-in-India vision. "This is a noteworthy step towards boosting the local manufacturing as it will discourage import of components and parts required for handsets," said CEAMA President Manish Sharma. "These initiatives, if implemented, will not only create an ecosystem of Electronic System Design & Manufacturing (ESDM) but also help realize the Make-in-India vision." The Union Cabinet today approved amendment in the Modified Special Incentive Package Scheme (M-SIPS) to further incentivize investments in electronic sector and moving towards the goal of "Net Zero imports" in electronics by 2020.

Manufacturing Industry Expecting Proper Infrastructure for the Sector In Budget
Source: The Economic Times; January 19, 2017

While the Finance Act 2016 restricted accelerated depreciation rate to 40 per cent from April, 1 2017, it is important to consider need for continuing accelerated depreciation on certain assets not as an incentive but considering quick obsolescence due to rapidly changing technology. Further, the depreciation available on plant and machinery at the rate of 15 per cent, should be increased to 25 per cent, which would enable companies to invest in latest technology to manufacture products of inter ..

Research is the lifeline of any business anywhere in the world. In order to promote innovation and create a state of art technology in sectors such as defence manufacturing, medical devices manufacturing, automobiles, etc it would be imperative to extend weighted deduction incentive by another 5 years at same rate. Also there is need to give similar benefit to renewable solar industries even on technology development.

As per existing law, the condition for additional deduction for employment of new workmen requires new employees to be employed for atleast 240 days in the previous year being the first year of employment. This leads to a situation wherein an employee if hired on October 1, will not be able to claim additional deduction even though such employee may continue to be employed for the entire subsequent year. This issue should be addressed and additional deduction should be granted if employee continues to be in employment even in the subsequent year although in 1st year he was employed for less than 240 days.

Privatize Defence PSUs to Fire Gains
Source: DNA; January 20, 2017

India needs a modern armed force with deep-strike capability on land, sea and air; and the ability to withstand and repulse unconventional attacks involving cyber, space, urban and nuclear-biological-chemical weapons.

Nearly 70% of India's defence equipment is imported. The balance 30% produced locally uses imported components. Given that nearly 50% of our defence equipment is nearly obsolete, large-scale imports is not a viable solution. The focus has to be 'Make in India' and not just as a lofty slogan.

The defence Budget needs to be enhanced from Rs 2.49 lakh crore in FY16 to Rs 3-3.25 lakh crore in FY18, to reflect India's security environment. Nearly 65% of the defence Budget is spent on operational expenses. This needs to be gradually reduced to free more funds for capital investments, which requires a mindset change, a planned reduction in conventional forces and increased focus on technology-oriented warfare.

Domestic production of defence equipment should be accorded the status of 'deemed exports'. All applicable taxes (customs, excise, VAT, service tax, octroi, etc) and corporate tax on production of defence products should be zero-rated for a period of ten years. Exports should be facilitated with monetary incentives and faster clearances.

Defence PSUs like HAL, BEL, HSL, GRSE, etc, need to be privatised and made to compete for defence orders. This would bring in greater hunger, efficiency and competition for taxpayers' funds.

Compiled by IESA Research

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